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The PNC Financial Services Group, Inc. (NYSE:PNC) is about to trade ex-dividend in the next four days. This means that investors who purchase shares on or after the 15th of January will not receive the dividend, which will be paid on the 5th of February.
PNC Financial Services Group's upcoming dividend is US$1.15 a share, following on from the last 12 months, when the company distributed a total of US$4.60 per share to shareholders. Last year's total dividend payments show that PNC Financial Services Group has a trailing yield of 2.9% on the current share price of $158.19. If you buy this business for its dividend, you should have an idea of whether PNC Financial Services Group's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for PNC Financial Services Group
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. PNC Financial Services Group is paying out an acceptable 62% of its profit, a common payout level among most companies.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we're not overly excited about PNC Financial Services Group's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. PNC Financial Services Group has delivered 28% dividend growth per year on average over the past 10 years.
The Bottom Line
Should investors buy PNC Financial Services Group for the upcoming dividend? PNC Financial Services Group has been struggling to generate growth while also paying out more than half of its earnings to shareholders as dividends. We're unconvinced on the company's merits, and think there might be better opportunities out there.